Estate Planning Myth #6: I must avoid probate

/ April 24, 2014

Last will and testament document - iStockThis issue varies significantly based upon where you live. In Minnesota, unlike some other jurisdictions, the probate avoidance opportunity doesn’t always rise to the level of necessity. The benefits of avoiding probate include:

  • not incurring the time delay,
  • avoiding the expense of court filing fees or attorney’s fees for opening the probate and administering the matter in the court, and
  • additional privacy offered by not having the decedent’s will filed with the court.

There are, however, expenses associated with creating the correct documents to avoid probate which may mean significant costs and additional efforts for administration during life. Regardless of whether the probate court is involved or not, there is an element of administration after someone dies. The table below is a condensed list of tasks for the personal representative of a probate estate compared to the duties of the trustee (and avoiding probate) after death:

Personal Representative

Trustee

Petition court for appointment as personal representative

Prove succession as successor trustee

Locate and collect assets

Locate and collect assets, although trustee may already have some or all assets

Prepare inventory of assets

Prepare inventory of assets

Manage, invest and administer assets

Manage, invest and administer assets

Sell assets if necessary or desirable

Sell assets if necessary or desirable

Coordinate preparation of final income tax returns of decedent

Coordinate preparation of final income tax returns of decedent

Coordinate preparation of estate income tax returns

Coordinate preparation of trust income tax returns

Coordinate preparation of state and federal estate tax returns

Coordinate preparation of state and federal estate tax returns

Pay all taxes (property, income, estate, gift, etc.)

Pay all taxes (property, income, estate, gift, etc.)

Pay debts and claims, pursue and resolve disputes and litigation

Pay debts and claims, pursue and resolve disputes and litigation

Obtain court approval or determination of any matter if necessary

Obtain court approval or determination of any matter if necessary

Prepare final account for beneficiaries

Prepare annual accounts and final account for beneficiaries

Distribute all assets to persons entitled under the will, or to trustee if required by the will

Distribute all assets to persons entitled under the trust document

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